Business In Washington - Business Operations & Management Consulting

Like most Washingtonians, we listened to the torrential rain hitting our roof hour after hour, periodically checking vulnerable areas of our property for rising waters.  For the second time in our memory, the intrepid Dennis dug trenches in the pouring rain at midnight, helping to channel water away from one of our doors.  He wasn’t able to avoid the flood completely, but his efforts did minimize it, containing the inside lake solely to the garage.

Also like fellow Washingtonians, we listened to the news.  Stories of loss, homes, belongings, the accumulation of a lifetime of memories, and in the worst case, loss of lives, were heartrending and touched us all.  We can all identify with our neighbors who lost so much and, as is common in this wonderful country we live in, individuals and organizations jumped in to help. 

As business owners, we were particularly touched by seeing the work of lifetimes spent building successful businesses wiped out in minutes.  A mudslide inundating a popular restaurant.  Stores with carpets now brown with slimy silt and stock ruined.  Grocery stores with fresh and frozen inventory ruined by power outages.  Third generation family dairy farms with their herds wiped out.  Somehow, this story was the hardest to hear and see.  These aren’t just cows!  They are the living core of a business, generating a living for the farmers and food for all of the rest of us. 

How do you bounce back from this?  As business consultants, how would we advise our clients in the face of losses this great?  Every business is different, but there is a basic core of business principles that cross the lines between industries and types of businesses.  We believe the initial focus should be on gathering information and possible sources of assistance and making a plan to move forward.  Then take action.  Each small step will help heal the soul as the work begins to heal and rebuild the business.

Here are some initial steps to consider.

Talk to your advisory team.  Every small business owner should have an advisory team consisting of at least a CPA, business attorney, business consultant or advisor, banker and commercial insurance agent.  This is the time to tap that resource for support and guidance.  In this case, start with the insurance agent.  He/she can advise you on your coverage and how to report the loss.  Your business consultant can help with ideas, contacts, and the wisdom of prior experience.  A consultant can also provide guidance and focus at a difficult time.  Your attorney can provide similar guidance, but with a focus on the potential legal issues. 

Document, document, document.  It is tempting to dive in and start cleaning, but it is critical to document the loss first.  Take pictures.  Take videos.  Make detailed lists of equipment, inventory and other items lost.

Read the small print in your insurance policy.  It is best to do this when you get the insurance in the first place, but many of us don’t do it or, if we do, we don’t remember the details.  You need those details now to find out just how much of your loss is covered.  Most policies don’t cover floods unless you have obtained separate flood insurance from the government.

Is your loss the result of a natural disaster or someone else’s act or negligence?  Although too many in our current litigious society think lawsuit first, it is still something that may be appropriate in some circumstances.  Consult your attorney.

Consider a temporary location.  Is it possible for your business to get started sooner in alternate quarters and operate at a level sufficient to begin generating dollars?  If so, start planning for that.  Talk to a commercial real estate agent.  Make lists of equipment and supplies required.

Determine what funds will be required to get back in operation.  Know how much you need.  Then determine potential sources and go after them.

Apply for State or Federal emergency grants or loans.  Disaster declarations free up public funds to help those who face serious losses.  This may take a while, but find out what the process is.  If you are still feeling overwhelmed (and who wouldn’t be), get some help.  Again, tap your advisors.  They may be able to help handle this task, taking it off your shoulders.  However, don’t wait and don’t rely solely on state or federal aid.  It is a wonderful thing that our government does, helping citizens who have suffered so much loss.  But remember that the strength of this country is the strength, ingenuity and self reliance of its citizens.

Be open to receiving help.  There are many sources of help available to you, both personal and professional.  Use them!  Your neighbors outside of the immediate disaster area just need to know what to do and how best to help.  There are many business professionals touched by what we have seen who want to lend a hand.  But you need to ask.  Since networking is the lifeblood of those of us who work in advisory roles, if we can’t provide the exact help needed, we probably know someone else who can.

Put a recovery plan in place and begin executing the plan.  If you establish goals for your business recovery and organize the big tasks ahead, you stand a much better chance of success.

Look forward, not back.  Regret, loss, grief, worry – all these are tough to deal with and can weigh you down and hold you back.  Learn from any past errors and make changes to avoid repeating them, but don’t dwell on them unnecessarily.  Look forward.  Rebuilding is a positive thing.  Believe us when we say, all of us in the business community are cheering for you and stand ready to lend a hand.

The importance of good first line management to an organization is frequently given short shrift, in my experience.  This is particularly true with small companies that may have limited training budgets.  This may not be the best place for penny pinching, however.  Consider the potential cost of ham-handed people management first.

That cost can be huge.  First of all, in our litigious society, it is important to avoid stepping into a very large legal pile out of carelessness.  We often tell the story (a true story, although we have changed the names to protect the innocent) of walking into a client’s main office for a meeting.  The receptionist, about 8 months pregnant, greeted us and said our client would be with us in a moment.

The client finally came out and we went into his office.  As we began our meeting, we asked about the receptionist.  Did our client have temporary help lined up to cover for her during her maternity leave?  Our client replied, “I’m going to fire that (expletive deleted) today.”  Taking care to close the client’s office door, we suggested, strongly, that our client discuss this with his attorney first.  The attorney, summoned immediately via telephone, said he would be happy to take the case - the receptionist’s.  It would be a slam dunk.

My point?  One potential cost of clumsy or uninformed management is the cost of a lawsuit. 

Sure, lawsuits are expensive, but I think the higher potential cost of poor first line management is employee turnover.  It’s not that easy to find and hire great talent.  So we urge our clients to consider how they manage them.  Make an investment of time and dollars - for books, training, or coaching - to improve your own management skills.  Promoting one of your employees into a supervisory or management slot?  Make sure to help him/her make that transition.  It’s not that easy to give up doing the work and start getting the work done through others.   

I was lucky to have the benefit of management training in a large corporation.  We called new manager school “charm school”.  Joking aside, it was great training.  It included direct input from our employees, too.  We worked individually with instructors to go over the results of those employee surveys.  In addition to the numeric ratings, we also had employee comments, retyped so we couldn’t identify the source.  These comments could be bruising, but ultimately helpful to our growth as people managers.  (In an attempt to protect myself, I talked to my employees beforehand, encouraging them to offer candid, but constructive comments.  They did.  Whew!)

Can’t afford fancy management school for your new supervisory staff?  There are other ways to help them grow in their new management positions.  If you are experienced, take some of your own time to work with them.  Meet with your supervisors regularly and discuss issues as a group.  This will help you establish consistent management process and style as you train.  Work with a skilled consultant who can help train your team. 

Scale your management development to your organization and budget, but don’t skip it!  Poor managers are expensive in more ways than one!

It’s January 2, 2008!  The crystal ball in New York has dropped, the fireworks have exploded from the Space Needle (at least some of them), the champagne has been drunk and Auld Lang Syne sung.  We’ve had a day to recover from the late night and celebratory excess while watching more football than I thought possible.  (Go Blue!  Finally, my team wins a bowl game, not for the Gipper, but for outgoing head coach Lloyd Carr.  This U of M alumnus is happy today!)

 Now, it’s back to work - the first work day of a brand new year that’s never been touched.  How’s your attitude?  Starting the day with a groan or with a sense of excited anticipation?  I for one vote for looking forward, rather than back.  The best way to do that is to have a clear vision of what you want to accomplish with your business in the new year.  Yes, it’s time for that annual rite of January, strategic planning.

 We are devoting our first working day of the new year to our planning effort.  January is a busy month for us, so making the commitment of an entire day for planning isn’t easy.  However, it is essential!  The most productive time of the year in my experience is the first half, before we are beguiled by warm summer days, children out of school, and just general laziness.  We absolutely don’t want to waste it!

Today, we are trying to accomplish the following:

• Review and validate our vision for our business.
• Determine our business goals for 2008 and make sure they support our vision.
• Develop action plans for each goal.

 It is an ambitious plan for a single day, but we are primed!  To make forward progress, you need to establish a destination, determine a course, then set out on your journey with purpose.   Based on many years of experience, we still firmly believe that, without these important steps, you will just spin your wheels and travel in circles.  With a goal, a plan, and purposeful action, you stand a much greater chance of achieving success.

Let the planning commence!

Lots of us shoppers out there are Costco addicts.  Speaking for myself, I have to say I love the thrill of the hunt, finding something unusual and exciting at a great price.  I appreciate the more mundane benefits of shopping at Costco, too - the high quality and really good prices for stuff I need and use every day, even if I wind up buying a quantity more suited to an army than to my small family. 

 The thrill of Costco’s  “treasure-hunt technique” was described in a recent Wall Street Journal article, from an interview with Costco CEO Jim Sinegal.  It’s a great article, one I highly recommend.  What I found even more important, however, were his comments about hiring and keeping good people.  Here’s the quote:

“WSJ:  Costco offers better wages and benefits than most of its rivals.  Why is that?

Mr. Sinegal:  We think that you get what you pay for.  If you hire good people, pay them good wages and provide good jobs and careers, good things will happen in your business.  We think that’s proven true in our case.  We are the low-cost provider of merchandise, and yet we pay the highest wages.  Wouldn’t that suggest that we’re getting better productivity?”

Well, duh.

We have seen this principle used and abused among our clients.  One, who had a serious cheap streak when it came to employees, had a constant problem with turnover.  Employee morale and attitudes suffered and the results were reflected in reduced productivity and lower profits.

In contrast, another client was known for paying extremely well (almost too well, IMHO).  He demanded a lot from his employees, but gave them the tools, training, and freedom to deliver.  And they did.  They worked hard and well.  Productivity soared along with profits.  And the employees stayed!  They were an effective team and were rewarded for their hard work and loyalty.

What is your experience?  Please share your stories!

Step 1: Business Structure and Governance
There are several viable forms of business entities, each with pros and cons relating to personal liability, income tax, payroll tax, limits on the number of owners, and taxation on profit distributions. Your business can be a sole proprietorship, a partnership, a corporation (S or C), or a limited liability company (LLC). You may start out with one structure and find it appropriate to switch to another during the life of a company. The point is to analyze and understand the differences and make an active, rather than passive, choice based on your situation and requirements.

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Business is both exciting and dynamic. The variety is endless. Products and services are constantly expanding, as are the ways they are offered to the public. New industries emerge regularly, with attendant new opportunities. And the personalities of the diverse businesses out there reflect the equally diverse personalities of their many owners.

We’ve had the opportunity and the pleasure to work with literally hundreds of companies over the years and the variety keeps us entertained, challenged, and constantly learning. However, there are threads of operational consistency woven through nearly all companies. In our experience, the quality of these “threads,”the basic operational foundation of a business, will make, or break, the best of companies.
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At Next Step Solutions, Inc., we are business operations consultants focused on small- to medium-sized companies. We are passionate about business and strive to help businesses grow, thrive, and make more money. Our clients are entrepreneurs who have built businesses with their hard work and passion, but who have been unable to realize their full growth potential. We help them overcome the internal obstacles holding them back and make the transition from an informal operation with the founder involved in everything to an organization with formal structures, professional management and a CEO leader who is free to focus on a vision for future growth.

When we begin working with a client, we start by learning as much as possible about their company, how it operates, its successes, and more importantly, its challenges. Working closely with the business owner, we perform an assessment of the business as it stands currently. Over time, we have found that there are 12 key areas of business operations that require attention and action, and this has become what we call our 12 Steps to Business Operational Success. This is the basis of our initial assessment. We can then rank the steps in priority order for the specific client and tailor our services to address his/her primary needs.

We work with our clients face to face, by phone and via email. A lot can be accomplished with the assistance of 21st century technology, but it can never totally replace the value of being onsite with our clients. Built into our service packages is a regular onsite status meeting which allows us not only to assess a client’s progress, but to observe and take the pulse of the business. This allows us to spot a potential issue our client may not see and address it before it becomes a real problem.

Our principals have extensive cross-industry business experience, spanning 2-3 decades in time and all types and sizes of companies. We offer our expertise to our clients in a number of ways, packaged to maximize the value they receive. Several consulting programs are available for a monthly fee, each including a specific set of services. Additional services are available as needed on an hourly basis.

Looking for a way to offer our expertise at a lower price point for very small businesses, we developed a version of our 12 Step program which can be offered over the telephone, making most efficient use of both time and money, scarce commodities for business small business owners. The 12 Steps are offered as individual teleseminars or in a unique tele-forum, which combines group training and one-on-one consulting.